Table of Contents
How do you determine your ideal asset allocation?
One guideline suggests that your stock allocation should equal 120 minus your age. For example, a 60-year-old’s portfolio would consist of 60\% stocks (or lower if they’re particularly risk-averse).
What is a reasonable expense ratio?
A reasonable expense ratio for an actively managed portfolio is about 0.5\% to 0.75\%, while an expense ratio greater than 1.5\% is typically considered high these days. For passive or index funds, the typical ratio is about 0.2\% but can be as low as 0.02\% or less in some cases.
What is the right portfolio mix?
Your target asset allocation should contain a percentage of stocks, bonds, and cash that adds up to 100\%. A portfolio with 90\% stocks and 10\% bonds exposes you to more risk—but potentially gives you the opportunity for more return—than a portfolio with 60\% stocks and 40\% bonds.
How should I divide my portfolio?
How to Allocate Your Money
- Invest 10\% to 25\% of the stock portion of your portfolio in international securities. The younger and more affluent you are, the higher the percentage.
- Shave 5\% off your stock portfolio and 5\% off the bond portion, then invest the resulting 10\% in real estate investment trusts (REITs).
How do you calculate expense ratio?
The expense ratio is calculated by dividing total fund costs by total fund assets.
How much of a retirement portfolio should be in fixed income?
How much of a retirement portfolio should be in fixed income? The classic retirement allocation is 60\% stock/40\% fixed income, and what you can expect to safely withdraw on an inflation-adjusted basis drops rapidly from there as you increase the allocation to fixed income.
How do you find the ratio of financial statements?
Financial ratios can be computed using data found in financial statements, such as the balance sheet and income statement, and form the basis of fundamental analysis. In general, there are four common types of measures used in ratio analysis: profitability, liquidity, solvency, and valuation.
What is the difference between equities and fixed income products?
Equity and fixed income products are financial instruments that have very important differences every financial analyst should know. Equity investments generally consist of stocks or stock funds, while fixed income securities generally consist of corporate or government bonds.
How do you use the 5 percent rule in investing?
How to Use the 5 Percent Rule of Investing. In a simple example of the 5 percent rule, an investor builds her own portfolio of individual stock securities. The investor could pass the 5 percent rule by building a portfolio of 20 stocks (at 5 percent each, total portfolio equals 100 percent).